Practising Innovation in Public Sector Procurement: Mobilising the Power of Local Spending – East Birmingham Inclusive Growth Strategy
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Conrad Parke
Centre for Local Economic Strategies (CL
The city of Birmingham is using public procurement to address its socioeconomic challenges and make its local economy more equitable. In this research brief, “Mobilising the Power of Local Spending – East Birmingham Inclusive Growth Strategy (Part 2),” Conrad Parke from the Centre for Local Economic Strategies (CLES) builds on the work outlined in the previous brief, “Working with the Anchor Institutions (Part 1),” to examine the practical application of innovative procurement strategies.
As the coordinator of the Birmingham Anchor Network, Conrad has been working closely with procurement managers and officers from the Network partners, and this brief captures lessons and insights from their collaborative efforts to foster inclusive growth in East Birmingham.
The previous brief (Working with the Anchor Institutions. Research brief no. 11/2024 – 4) introduced the concept of anchor institutions—large public sector organisations with substantial local influence—as key players in driving economic inclusivity and highlighted the barriers to embedding social value in procurement. This brief (Mobilising the Power of Local Spending – East Birmingham Inclusive Growth Strategy. Research brief no. 11/2024 – 5) focuses on the implementation of these ideas in East Birmingham, an area with significant socioeconomic challenges and a local economy dominated by micro-enterprises.
Through initiatives such as hyper-local spending, simplifying procurement processes for smaller contracts, and fostering direct connections between anchor institutions and local businesses, the Birmingham Anchor Network is piloting approaches to address these barriers. This brief highlights the practical challenges encountered, the innovative solutions being tested, and the potential for these efforts to transform public procurement into a tool for equitable economic growth. This brief also offers an understanding of the practical application of procurement strategies, showcasing their potential to support local businesses, create jobs, and build resilient communities.
Key Points from the Brief:
Practising Innovation in Public Sector Procurement: Mobilising the Power of Local Spending – East Birmingham Inclusive Growth Strategy
File type: pdf
File size: 2.67Mb
Conrad Parke
Centre for Local Economic Strategies (CLES)
As the Co-ordinator of the Birmingham Anchor Network, Conrad has been working with the procurement managers and officers from each of the Network partners, and the following two briefs will capture some of the learning from this experience:
Part 1: Working with the Anchor Institutions
The first brief (Working with the Anchor Institutions. Research brief no. 11/2024 – 4) introduces the concept of anchor institutions—major public sector entities with substantial local influence—as catalysts for economic inclusivity, highlighting the potential benefits of innovative procurement in Birmingham. The brief explains how standard public sector procurement practice needs to change and, in particular, innovate if the potential of public sector spend is to be truly unlocked for greater economic benefit.
Part 2: Mobilising the Power of Local Spending – East Birmingham Inclusive Growth Strategy – coming next week
The second brief (Mobilising the Power of Local Spending – East Birmingham Inclusive Growth Strategy. Research brief no. 11/2024 – 5) will delve into the practical application of the Anchor Institutions within East Birmingham, the city area facing significant socioeconomic challenges. The brief outlines some of the practical barriers and the innovative procurement approaches they are now trying to introduce.
Together, these two pieces underscore the transformative potential of innovative procurement policies in supporting small local businesses, fostering job creation, and distributing economic growth more equitably. These two pieces provide valuable insights into the policy framework and the practical hurdles of embedding social value in public procurement.
Key Points from the First Brief
Download the full publication below.
Practising Innovation in Public Sector Procurement: Working with the Anchor Institutions
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Maria Fernanda Ibarra Gutierrez
University of Manchester
Dr. Luis Ospina-Forero
University of Manchester
Prof. Elvira Uyarra
University of Manchester
With the public sector spending £400Bn per annum, and the need to deliver more for less across local, regional and national government, the need to better understand how money is being spent is absolutely necessary for reasons such as:
• Procurement markets and trends monitoring: Governments can describe spending and time trends, and compare performance across entities, regions, contract types, etc.
• Data-driven procurement policy-making: Governments can assess efficiency gaps to identify areas for reform, monitor the impact of new policies, and understand potential trade-offs of different strategies.
• Transparency and accountability: Civil society can monitor the procurement system.
Another important aspect is to understand where the opportunities for innovation lie through identifying where procurement-powered innovation has created new value, whether it’s through open innovation challenge calls or other means. Owing to the challenges around reporting, this has proven to be a challenge.
IPEC Research, a centre funded by the Innovation Procurement Empowerment Centre, commissioned a paper through experts from the University of Manchester to identify some key barriers affecting the transparency of public procurement information in the UK, including data quality issues such as lack of unique identifiers, duplicated records, inconsistent dates, and missing data fields.
The paper makes the argument that improvements in data collection, quality, and availability in public procurement is important to support accountability, transparency and to inform policy reform.
The authors found three main challenges:
The report suggests that it is important to improve the collection, compilation, quality, storage and availability of procurement information. The authors argue that the Act will address some of the problems mentioned in the report. For instance, there will be a platform for suppliers to register and store their details to avoid having different names for the same suppliers. Also, there are plans in the Act to join into a single database the information to centralise procurement data.
Download the full publication below.
Transparency on the reporting of public procurement information: lessons from handling compiled procurement information
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Dr Chloe Billing
Research Fellow at the University of Birmingham
In an era of complex societal challenges and rapid technological advancement, governments are constantly seeking innovative ways to address public needs and stimulate economic growth. One powerful yet often overlooked tool at their disposal is public procurement. With public expenditure on goods and services accounting for 10-15% of GDP in OECD countries, strategic use of this purchasing power has the potential to catalyse groundbreaking solutions and drive innovation across various sectors.
This research briefing investigates the intersection between public procurement and innovation policy. The study explores how governments can harness their buying power to not only meet immediate needs but also foster a culture of innovation in the private sector. By acting as lead customers, catalysing new solutions, and employing strategic procurement techniques, public authorities can create a ripple effect of innovation that extends far beyond the initial purchase.
The research examines several key aspects of innovation-driven procurement, including:
The work also highlights the challenges faced in realising procurement’s full potential as an innovation driver. From risk aversion to fragmented budgets, the study offers insights into overcoming these barriers and provides recommendations for policymakers and public sector leaders.
As we navigate an increasingly complex world, the strategic use of public procurement presents a unique opportunity to address pressing societal needs whilst simultaneously fostering innovation and economic growth. This research offers in-depth analysis and recommendations for harnessing public procurement as a catalyst for innovation.
Leveraging Public Procurement to Drive Local Innovation
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Dr. Oishee Kundu
University of Manchester
Prof. Elvira Uyarra
University of Manchester
Public procurement, representing around 12% of GDP in OECD countries, is increasingly recognised as a powerful tool for driving not only innovation but also broader goals like sustainability and economic development.
This research brief synthesises research findings on the impacts of PPI, looking at both theoretical and empirical evidence, as well as methodological challenges in studying its effects.
Public procurement has the potential to shape innovation by:
Studying PPI involves several complexities, including:
Further research should aim to:
Download the full publication below.
Public Procurement of Innovation: Impacts, Evidence, and Methodological challenges
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At a recent panel discussion co-organised by IPEC and Digital Leaders, experts shared valuable insights on overcoming these challenges and driving successful outcomes.
Effective governance is key to fostering innovation. Elizabeth Vega OBE, Group CEO of Informed Solutions, highlighted that governance should be agile and adaptive, supporting decision-making processes that prioritise outcomes over rigid procedures. This approach encourages transparency and collaboration, as demonstrated by her organisation’s practice of keeping key subcontractors visible to the client. “Governance should be an enabler, not a blocker,” she noted, emphasising the importance of flexibility in governance structures.
A crucial element of innovation is creating a culture where diverse perspectives are welcomed. Elizabeth emphasised the importance of an environment where “people feel safe to express their beliefs in a constructive way,” allowing for respectful yet challenging discussions that can lead to real change. She added, “Innovation thrives where there’s psychological safety, enabling people to question the status quo without fear.”
Demonstrating value through case studies is another essential strategy. Elizabeth noted that while a single case study might not cover all bases, multiple case studies can collectively highlight relevant aspects of a solution, reducing perceived risks and showcasing capabilities to potential clients. “It’s not about one perfect case study; it’s about a portfolio that tells the full story,” she explained.
Flora McFarlane, Head of Growth & Partnerships at VivaCity, shared her approach to overcoming challenges by securing early adopters who are eager to innovate, such as Oxfordshire and TfL. These cornerstone clients played a critical role in validating their technology, making it easier for more risk-averse clients to consider adoption. Flora stressed the importance of understanding procurement teams’ needs and constraints, and working closely with them to navigate obstacles. “We had to be patient and persistent, demonstrating our value in every conversation,” she said, highlighting the importance of perseverance in the public sector landscape.
Darren Kelly, Central Government Capture Lead for UK Public Sector at Amazon Web Services (AWS), highlighted the need for early engagement and education to align procurement teams with the specific solutions being considered. He pointed out, “The procurement manager is an expert in the procurement process and not necessarily an expert on what they’re buying,” underscoring the value of clear communication and collaboration early in the procurement cycle. Darren also stressed, “If you engage early, you get to shape the conversation. It’s all about building trust and educating the buyer about your solution.”
The new Procurement Act 2023 offers opportunities for more flexible frameworks, which could greatly benefit both suppliers and buyers. Darren noted that open frameworks extending up to eight years can provide the flexibility needed to accommodate evolving technologies like AI and cloud services, allowing for new suppliers to be added as needs change. “These longer frameworks allow for a dynamic marketplace that can evolve with technology, rather than being locked into outdated solutions,” he commented.
Legal insights from Jenny Beresford-Jones and Shailee Howard from Mills & Reeve, added another layer of strategic advice. Jenny stressed the importance of staying updated with legal changes to gain a strategic advantage, while Shailee highlighted the value of not just meeting legal requirements but strategically planning engagement with the procurement process to maximise opportunities for innovation. Shailee noted, “Understanding the legal landscape isn’t just about compliance; it’s about leveraging the rules to create better opportunities.”
The discussion also touched on the delicate balance between innovation and alignment with organisational goals. Elizabeth suggested techniques such as empowering individuals to speak up, building skills alongside implementing solutions, and maintaining regular touchpoints to monitor cultural and emotional alignment, not just compliance metrics. She summed up by saying, “It’s about ensuring that innovation aligns not just with the letter of the law but with the spirit of the organisation’s mission.”
In summary, the panellists underscored the importance of building long-term relationships, understanding the unique dynamics of public sector procurement, and consistently demonstrating value through transparent and flexible approaches. As Rikesh Shah, Head of IPEC, summed up, the key to success lies in understanding the service owner’s problems, building lasting relationships, and focusing on creating long-term value over many years through innovation.
IPEC is currently partnering with four local authorities, addressing some of the key industry challenges and helping them find solutions through innovative procurement strategies. We are keen to hear from local authorities about some of the challenges they are currently facing as they look ahead into the next year. Reach out to us at ipec@cp.catapult.org.uk
Rail trackworkers are an essential and valued part of the Network Rail workforce, performing essential installation and maintenance activities. They work on challenging tasks in challenging environments, often through the night. Their safety is a priority, and over the years much progress has been made to improve the ways in which operations are conducted and the equipment used.
While the UK has one of the best rail safety records in Europe, developments in processes and technology are continually being pursued to improve worker safety.
With this in mind, Network Rail and Connected Places Catapult have worked together to develop wearable safety devices that allow rail workers to be alerted as soon as they step out of a safe zone, defined by a virtual ‘geofence’ perimeter.
Workers can unintentionally find themselves in a position of danger if they lose situational awareness, which can be described as being unaware of or confused about their position, relative to where they think they are or where they should be.
There can be a number of causes for this, such as working on complex tasks requiring close focus, working in the dark, fatigue and cold, or in generally difficult environmental conditions.
Network Rail has identified geofencing technology as a potential solution to improve the safety of trackside working. Geofencing is a location-based technology where a mobile, cloud-based app or other software uses GPS, radio frequency ID (RFID), Wi-Fi or cellular data.
A mobile device can be worn to alert workers when entering or exiting a virtual boundary set up around a geographical location, known as a geofence. This provides an additional ‘tap on the shoulder’ for workers if they inadvertently stray outside of safe working limits. It would be deployed alongside and in addition to existing safety protocols and procedures.
Connected Places Catapult has been supporting Network Rail in developing this rail safety innovation. This was achieved by working with the client to first identify core technical needs and articulate these in the form of a challenge statement, providing criteria to test the market via a design contest process.
The aim of the process was to identify potential technology solutions that may be at different stages of development or applied in other sectors.
The design contest process enabled Network Rail to source three innovative technology solutions from three suppliers. Connected Places Catapult partnered with Network Rail to then test and trial their geofencing solutions in an operational track environment during a 10-week trial period. The Catapult oversaw the trials, working in close collaboration with the Network Rail Safety Task Force team and local route team.
The collaboration provided an excellent opportunity for the technology to be developed; firstly testing the solutions for accuracy and functionality, and then testing the devices across a variety of track scenarios and operations. Feedback was obtained from track workers, while the device suppliers developed their own understanding of how the devices could be developed.
By the end of the trial period, the three suppliers Tended, Track Tracker and Onwave had devices that were close to deployment at Network Rail while the route teams and the Safety Task Force team gained an understanding of where Network Rail would best make use of the technology.
Connected Places Catapult developed a trial report structure that was used by the suppliers to facilitate onward implementation and use of the innovations.
A short animation to describe the technology was produced as part of the output of the trial project. This can now be used across Network Rail to outline the technology and facilitate potential deployment.
The devices will be tested against British Standards to prove functionality, for example performance under extreme conditions.
A design contest is a procurement process that provides the option of engaging with successful suppliers at the end of the process via a service contract.
The overall process has provided an opportunity for SMEs to engage with Network Rail and bring their innovative technologies to the rail sector, and to test and refine the technology through the trials.
Connected Places Catapult’s support to the process was through project management and technical input. Our project management covered the delivery and governance of trial requirements between the Network Rail routes and SMEs. Connected Places Catapult ensured a robust testing environment across the route teams, and shared learning and best practice between the trial locations. We guided the tests, the testing schedules across the trial locations, and the final reporting output.
Network Rail has benefitted by exploring a new, innovative technology which has been demonstrated on live track environments. Service contracts would allow for implementation with the suppliers.
The benefit to suppliers was experience of working with track maintenance teams and the invaluable opportunity to develop their products with input from the end-users. The opportunity to demonstrate the functionality of their technology with Network Rail across a range of activities provided credibility of their devices in the rail sector.
Furthermore, the trials and evidence gathered has progressed the devices through the Network Rail product acceptance process. If the device suppliers continue to obtain full product acceptance, this would enable the devices to be used across Network Rail as well as provide significant interest across UK and European rail sectors.
Although the devices were all slightly different at the start of the trial process, Technology Readiness Level (TRL) development of each has developed from around TRL 4/5 to TRL 7. Further requirements are now being developed by the Network Rail sponsor to ensure the devices are ready for deployment.
It is understood that the suppliers have all benefitted from the trials through securing commercial contracts or further funding for technology development.
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The London Borough of Barnet secured £12 million in grant funding to support four EV projects, covering 50-75% of the project costs. However, the procurement process faced innovation barriers due to the unfamiliarity of EV markets among colleagues. Challenges included tight timelines, complex procurement requirements, and concerns over contract lengths and bid scoring methods.
The London Borough of Barnet’s EV charging programme showcases the importance of collaboration, flexibility, and market engagement in overcoming challenges and delivering successful projects. By navigating procurement barriers, adapting financial models, and leveraging market feedback, Barnet achieved its goal of expanding EV infrastructure while ensuring cost-effectiveness and sustainability.
“When conducting a procurement of innovation, clarity in the Invitation to Tender (ITT) documents is paramount. Ensure that requirements are articulated with precision. By providing explicit guidance in the ITT documents, local authorities can minimise the need for extensive clarification questions and reduce the risk of bidders misunderstanding or becoming confused about the project’s requirements.”Paul Bragg, Head of Network and Infrastructure – Street Scene, London Borough of Barnet
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By leveraging the SBRI framework, the Council collaborated with small businesses to develop creative solutions for local challenges, driving efficiency and delivering impactful results for the community.
Business rates provide more than half of Belfast city council’s annual revenue, used to fund local services. However, with a constantly changing business community, the maintenance of an up-to-date register of businesses in the city to inform the timely and accurate collection of rates income can be challenging.
Initially, Belfast tried to identify solutions already on the market that would help boost revenue from rate-paying businesses, but after market research found no solutions commercially available, Belfast looked to launch a competition to attract new suppliers.
The Small Business Research Initiative (SBRI) is an approach that brings public sector challenges together with ideas from business to create innovative solutions. According to Innovate UK, the SBRI programme has brought more than £1 Billion to the UK economy with over 66% of the contracts awarded to SME’s.
Keen to harness this approach, Belfast prepared to lay their challenge out to the market.
The first thing that Belfast needed to do before engaging the market was to define the problem they were actually trying to solve. Connected Places Catapult helped apply an objective, human-centred approach to this exercise in order to encourage creative solutions without overly defining the eventual solution — i.e. leaving room for innovation.
In defining the challenge, Belfast focused on what outcomes they wanted to achieve, rather than defining how they wanted to achieve them. For Belfast, these outcomes included:
Working with Land and Property Services, Belfast City Council applied for £100,000 of funding from the Department for the Economy to bring forward the development of a timely, accurate and cost effective solution which could be implemented to maximise business rate revenue for the city. The council contributed a further £50,000 to the funding.
To reduce risk and allow space for innovative solutions to be developed and validated, the SBRI approach allows for a multi-stage bidding, shortlisting, validation and selection process.
The first step was running an open call that was open to any companies interested in taking part in the competition. To kick this off, the Council developed a structured plan for market engagement which included activities such as running ‘meet and greet’ sessions open to companies interested in taking part in the competition to talk to council officers about it and get prepared. The open call was then released which was publicised in the press with a competition briefing and online application.
As a result of the competition, four companies were awarded £5,000 each to help turn their ideas into more substantial proofs of concept over a six-week period. These projects focused on behavioural economics, Internet of Things networks, rule-based analytics and machine learning models. Crucially, none of the firms which responded to the open call had previously considered themselves local government suppliers.
Two companies — Analytics Engines and NQuiring Minds — were awarded further funding of £55,000 each to turn their concepts into functional prototypes during Phase Two. This phase ran from November 2016 to March 2017.
The companies had the opportunity to trial their new solutions over a two-week period. Using different approaches, they used a range of data sources, such as from Belfast City Council, Land and Property Services and Northern Ireland Water, to enhance the process for identifying rates income from businesses in the city.
During the final two-week evaluation period, the two companies identified an initial £500,000 of previously uncollected business rates. Subsequent use of the winning solution has since revealed still more previously unrealised revenue which is now being used to deliver local services.
In addition to demonstrating to Belfast City Council the value of taking a challenge-based approach to procurement, the SBRI process also gave SMEs a valuable opportunity to innovate and commercialise ideas in a real-world environment.
“Our experience of working with Belfast City Council and Land & Property Services has been invaluable, and having the opportunity to work on a city challenge directly with the service end users has been incredibly rewarding. Access to data and funding allowed us to focus fully on the challenge at hand, including the development of algorithms, which gave new insights and allowed us to propose new ways of doing things. We are now promoting our solution to a range of new markets.”Analytics Engines
Since the completion of this SBRI, Belfast City Council not only moved to procure a rates maximisation solution, but expanded its use of challenge-based procurement through the creation of the Smart Belfast Framework though which they regularly publish information about problems they are looking for the market to solve.
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“Over the past decade, Belfast’s economy has become increasingly dynamic, with lots of new businesses either setting up or moving premises every month. That’s obviously good news for the city. But as a result, we’ve had great difficulty in accurately tracking which businesses should be paying rates… We needed to improve our access to up-to-date and real-time information.”Deborah Colville, Belfast City Innovation Manager and Head of the Smart Belfast programme.
A number of new approaches had been tried over the years to address the problem, but they tended to rely on slow and manual processes.
Under its Smart Belfast programme, the city launched a competition to encourage innovative companies to address the challenge. The selected companies each received £100,000 through the Northern Ireland Small Business Research Initiative which encourages businesses to bring innovation to public sector challenges.
Data scientists and other experts from the UK’s Connected Places Catapult came on board to better define the challenge and the specific outcomes the city wanted to achieve.
“We discovered that we needed to stop trying to second guess what a solution should look like, and instead focus on developing an excellent challenge definition process,” says Colville. “You need to commit to opening up your people and your data to give these businesses the chance to fully understand the complexity of the problem.”
After an open call, proof of concept and prototyping rounds, two companies – Analytics Engines and NQuiring Minds–were selected to tap into a range of data sources to help identify a solution to the challenge.
“We opened up 24 data sets across a whole range of other organisations, like Northern Ireland Water and Land and Property Services. We also provided our own council data sets such as waste collection, so we could find out if services had been accessed at particular premises,” she explains.
In the prototype phase the two companies identified an initial £500,000 of previously uncollected business rates, and since then, additional opportunities to collect revenue have been uncovered.
“The project really demonstrated the power of data science in helping the city to better understand a rapidly changing economy. Even ten years ago, cities could perhaps have relied on traditional methods to track such change. In the modern world this is no longer an option.”
“We’re now further developing the model to help us understand other aspects of the city, its economy and the ecology of its property market,” Colville says. “From there, we’re beginning to feed into wider city planning and decision-making, not just rates collection.”
Challenge-based procurement is an integral component of the Smart Belfast Framework, first released in 2017, which established a permanent city innovation team driving innovative procurement approaches alongside traditional procurement, within the council.
“A key learning for us is the relationship between public innovation and public procurement. Right from the beginning we’ve been very aware that the public sector’s traditional approach to procurement can sometimes present a barrier to innovation, which by its nature can be difficult to predict in terms of success. So it’s very important that we work with our procurement experts in council to find ways to address these tensions.”
Since the launch of the Framework, the council’s City Innovation Team has delivered a diverse portfolio of 47 projects, leveraging funding worth over £10 million and working with over 200 SMEs and stakeholders. Projects have used a range of technology including IoT, AI, machine vision cameras, chatbots, VR and AR, satellite imagery and data analytics to tackle challenges in areas such as urban mobility, healthy living, air quality, tourism, economic development and the Covid pandemic.
The framework is also driving the development of a £120 million digital programme across the region as part of the Belfast Region City Deal, with investment in wireless infrastructure, healthy neighbourhoods, green energy and integrated mobility projects.
Belfast is building on its learning to design ever more ambitious challenge fund programmes for wider societal challenges related to decarbonisation, mobility, citizen engagement and health. It is due to receive £55 million as part of the Belfast Region City Deal to support these funds in 2022.
Belfast’s innovation focus now is on its new Smart District and Innovation District – seeking to introduce digital innovation into the city and economy’s ongoing development and management from street level upwards. Essentially, it’s about the procurement of innovation.
“Procurement can be a very black and white way of looking at something in terms of customer and supplier relationship,” says Colville. “We’ve realised the best procurement should encourage a collaborative focus on outcomes – not solutionism. We’re working to harness the city’s strengths, its creativity, research and academic excellence for the long-term benefit of all our citizens.”
Connected Places Catapult launched our Challenging Procurement programme to engage with experts and representative bodies from across the public procurement ecosystem to challenge the myths surrounding public procurement, share pioneering practice, set out new pathways and outline best practice for the procurement of new and innovative solutions by the public sector. Visit our Challenging Procurement hub to learn about the support CPC can provide and discover resources which can help you procure innovation.
Harnessing public procurement to signal appetite for new solutions is a common trait among successful hubs of innovation. Building on our experience supporting Belfast and its regional partners, Connected Places Catapult is growing a global network of place innovation pioneers to spark the innovation potential of every place.
Join place leaders from Belfast, Bergen, Glasgow and elsewhere at the upcoming UK Innovation Places Summit to connect with others who are using public procurement and other tools to drive new economic prosperity through innovation in their areas.
Share your council’s innovative procurement success story and inspire others across the UK to adopt transformative approaches for their communities!